Investors shift to Swiss franc carry trade

Following rare U.S.-Japanese intervention to support the yen, investors are beginning to rotate from the yen to the Switzerland — Swiss franc as a funding currency for FX carry trades. The franc has weakened to near 0.9385 per euro, its weakest in about a year, and is down nearly 7% from an 11-year high against the dollar. Analysts at Rabobank, BofA, ING, and Neuberger Berman note that Swiss rates at 0% and lower volatility make the franc an attractive alternative to the yen, which faces intervention risk and potential rate hikes. The Punjab National Bank welcomes a weaker franc and has signaled willingness to intervene if needed. This shift could relieve Swiss exporters and policymakers who have long struggled with franc strength.